1. Field of the Invention
This invention relates generally to the field of retail marketing promotions, and in particular, to an exemplary credit accumulation and accessing system.
2. Description of Prior Art
Traditional methods of advertising have called for merchants making announcements through many media avenues. These avenues include television, radio, newspapers, magazines, celebrity endorsements and other similar endorsements. The announcements are often spoken as with radio, or written, as with the printing of coupons in newspapers. These methods are usually very expensive, very time consuming, and often have to be paid for by merchants in advance of, and without any guarantee of future sales. Air time and periodical space are often sold at a premium. Designing advertisements, doing research to define the exact target audience, and choosing where, when and how to place the advertisements are burdensome. This is sometimes so complicated and so demanding that additional employees or outside agencies are often hired to take care of such details. Celebrity endorsements require the need for having the right contacts or, if one does not have good contacts, hiring an expensive agency that does. The management of coupon collection, verification, shuffling, and redemption is nearly an administrative nightmare. Many printed coupons, are collected by consumers, often in quantities of hundreds or even thousands of small pieces of paper, and are often later presented to merchants for redemption. The merchants collect the coupons as they are presented, verify that the presented coupons are valid, honor the discounts, and later sort the coupons. Sorting the coupons is a very time consuming process and usually is performed at the end of the day so as not to delay consumers. Coupons issued by manufacturers or other third parties are compiled and then sent to their respective issuers, for redemption. In this case, merchants have the disadvantage of having to wait to receive full payment from the manufacturers or third-party-coupon issuers, for the goods that were sold earlier at a discount. Reimbursement can take weeks, even months, and such delays can have a detrimental effect on a merchant's cash flow. The merchant often buys goods from the manufacturer in advance, and has to sell them to recoup the investment and make a profit. The longer the delays are, the longer the merchant's turn around time on their investment is and the longer restocking ability is delayed. Consumers on the other hand, become confused with collecting so many coupons, that often times, they find that several coupons have been left at home, some time during shopping or checkout. Furthermore, the use of the coupon method creates massive paper waste. Many times, coupons are printed and never redeemed. The ones that are redeemed are not always recycled because of human disregard or inconvenience.
The collection and redemption portions of the coupon method mentioned above, can be made simpler by the use of Humble's U.S. Pat. No. 4,949,256 issued Aug. 14, 1990. However, the use of this patent requires the acquisition of costly, and substantially, space consuming, automated equipment. Furthermore, the use of the patent does little to reduce the paper waste inherent with the traditional coupon method.
Nearly all merchants' sale prices must increase dramatically to counter the expenses incurred by the use of any of the above mentioned promotional techniques. This causes the overall cost of living to increase, hurting the entire economy.
Another promotional technique used by merchants is network marketing, also known as Multi-Level Marketing, or MLM for short. With this method, to aid the sale of merchants' products, merchants typically hire independent contractors. These independent contractors are also hired to assist the solicitation of other independent contractors, known as "recruits," who aid in selling the merchants' products. Each independent contractor can buy products from a merchant and use the products themselves or sell the products to others. Each independent contractor can also recruit other independent contractors who inherit the same opportunities as the person recruiting them has. This means, the recruits can also purchase, use or sell the merchants' products and recruit other independent contractors. With MLM, an independent contractor earns money two ways, by selling to others, at a markup, the products they bought from the merchant, or by receiving a commission on their recruits' sales. When a sale is made by the recruit of an independent contractor, the independent contractor receives a commission. In this instance, the commission structure is considered to have gone through one level of sponsorship. Commissions can derive from more than one level of sponsorship, such as when the recruit of an independent contractor's recruit makes a sale. According to the structure, the independent contractor might earn a commission from that sale, considered to have gone through two levels of sponsorship. The industry has used various commission structures, some offering eight levels of sponsorship or more. All of the recruits included in an independent contractor's levels of sponsorship are regarded as the independent contractor's "downline." The industry has used various methods of determining an independent contractor's commission rate. This includes totaling the sales generated by an independent contractor's downline, and applying a commission rate based on that figure. Often, levels are set in which this rate increases as the independent contractor's downline-sales-volume increases.
Multi-Level Marketing previously has had many disadvantages. To adopt such a marketing plan typically requires a merchant to have a broad understanding of MLM. Since this information is not common knowledge, merchants often must hire an individual who is familiar with MLM. These individuals are few and far between, making it difficult for merchants to find them. This allows these individuals to charge extremely high fees, so much so that most small businesses can not afford their services. Those merchants that can afford the service often find that once the MLM plans are established for them, they are burdened with having to handle an enormous amount of paperwork. This paperwork includes designing, and printing enrollment forms, order forms, and catalogs, and then mailing them to potential participants. This also includes receiving and processing completed enrollment forms and order forms; and calculating, printing and then mailing commission checks to independent contractors. Merchants have been known to purchase computers to assist this process. Merchants are also often limited to including in their catalog, only easily shipped or stored products. This is because the independent contractors must often pay for merchandise shipping charges and store the merchandise on their own property until it is sold to others. Any product that is too bulky, or heavy, would not be cost effective for independent contractors to purchase. This is because the independent contractors would have little room for storing bulky merchandise, or with the added expense of shipping and possibly storage, there would be little, if any, room for markup on its future sales.
The independent contractors are often limited to shopping through a catalog in order to purchase the merchant's products. This has the disadvantage of an independent contractor often having to pay for shipping charges of the ordered goods. It also has the effect of causing the independent contractor frustration, as shipping often carries several problems. With shipping, the independent contractor has to wait for the merchandise to arrive. This can take days, weeks, or in some cases, even months, as the merchant may be out of stock of the selected merchandise. When the merchandise finally arrives, the independent contractor is often dissatisfied for one of several reasons. The merchandise might be damaged from shipping. It might be the wrong merchandise, as orders are often botched through improper communication. The merchandise might not be of anticipated quality, such as a dress that does not fit properly. In the likely event of this dissatisfaction, often the independent contractor must go through the ordeal of repackaging and shipping the merchandise back to the merchant. The merchant will then do one of several things. The merchant might refund the independent contractors' money, which leaves the independent contractor feeling as though the whole experience was a waste of time. In the event the merchandise was damaged in shipping, the merchant might ship the independent contractor replacement merchandise. This would force the independent contractor to wait even longer for the desired merchandise to arrive. The replacement merchandise could also become damaged through shipment. If a merchant issues the independent contractor a credit line equal to the amount of the original purchase which was returned, the independent contractor, is often forced to buy something else from the merchant's catalog. This poses several problems for the independent contractor. The independent contractor might not be interested in any other merchandise the merchant has to offer since the catalogs are often limited in variety, in which case the independent contractor must purchase something that is undesirable. The price of the supplemental merchandise might not be the same as the purchase price of the original merchandise. If the supplemental merchandise price is higher, the independent contractor must spend more of his/her money than he/she originally planned to spend. If the price of the supplemental merchandise is less, the independent contractor will have money, which is not gaining interest, tied up with the merchant for an extended period of time. In other words, the independent contractor will have his/her money held by the merchant until such time when it is used toward another purchase.
With MLM, independent contractors must often store merchandise on their premises. Merchandise is usually bought in advance from a merchant by an independent contractor, who, in turn, stores the merchandise and attempts to sell the merchandise to others. Many independent contractors have not had sales training, but participate in an MLM plan because they are tempted by the high profit potential this sort of self-employment offers. As a result of their lack of proper sales training, often times, much of the merchandise they stocked up on, can not be sold to others. Rather, it remains stored on the independent contractor's premises for an extended period of time. Eventually, to become rid of the unwanted merchandise, the independent contractor must often do one of a few undesirable things. He/she must either give the merchandise away, sell it at a greatly reduced price, use it themselves or throw it in the garbage. This has had the unsavory result of depleting an independent contractor's cash flow. It has also resulted in many independent contractors after a certain degree of exposure to the program, often becoming jaded with MLM, subsequently giving up self-employment with MLM forever, and discouraging others from participating in any MLM plan also. Catalogs of merchant's products or services have also been bought and given to, or sold to others by independent contractors. This can alleviate the need for an independent contractor to stock up on merchandise, but requires the independent contractor to purchase the catalogs. Often times, a shopper does not want to pay for a catalog, as they are not sure if there is anything in the catalog that they even want to buy. Independent contractors, on the other hand, do not want to give the catalogs out for free. When the independent contractor gives the catalog out for free, the independent contractor does not recoup the investment he/she made to acquire the catalog. This results in an independent contractor's cash flow becoming depleted. If the shopper does buy the catalog and then buys something from the catalog, the total cost of what was spent to acquire the merchandise is greater than the list price of the merchandise. Add on shipping costs that the purchaser must pay and the total cost to acquire the merchandise rises substantially. Usually, the resulting price is equal to, and often greater than, the price of comparable merchandise found in a retail store or especially a discount store. Shoppers become discouraged upon having to pay an often higher than retail price for the merchandise from the catalog and being subjected to the problems associated with shipping, as mentioned previously. This leads most shoppers to avoid purchasing through these catalogs. This in turn, results in minimal sales for the independent contractor, who again, after a certain degree of exposure to the program, often becomes jaded, gives up self-employment with MLM, and discourages others from participating in any MLM plan also.
Another method used by merchants to assist sales of their goods or services, has been the installation of incentive programs. Incentive companies have been hired in the past to install such programs. The incentive program usually entails a participant carrying a card or bearing an identification number. This card or identification number is used to keep track of a participant's transaction. With the program, participants present their cards or identification numbers when making purchases. This allows participants to accumulate credit in their respective accounts based upon various purchasing goals established by the merchant. These goals can vary, but are mainly designed to increase a participant's spending with a merchant within certain time periods. Points have been awarded to participants according to their performance under the program's rules. The points are usually converted to dollar amounts according to a formula. The dollars are then used to purchase merchandise shown in the incentive companies catalog. The dollars could also be used to earn a paid trip for the participants and perhaps a certain number of family members to a vacation spot such as Hawaii or Florida. In some cases, at either the culmination of the program or a set period within the program, the points are converted to a direct cash payment. This payment is either handed to the participant, wired to the participant's bank account or charge card, or issued to the participant as a check, money order, certificate or coupon. It has also been issued to a separate account on a participant's charge card to be used only toward the purchase of a specific merchant's goods or services.
Computer programming and data processing have often been used to assist these incentive companies with managing the operations of the program. This includes printing, issuing and mailing reports to participants that show the credit issuing merchant's name on the statements. These statements also show participants' earned credit to date and approaching goals. This also has included printing and issuing to participants, charge cards that advertise the merchant and/or lending institution that sponsors the incentive program.
Incentive programs previously have had a number of drawbacks. There are several types of programs that allow for the issuance of merchandise, some of which also offer cash as awards. Originally there were only two methods for issuing merchandise. With one kind, an incentive company had its own warehousing facilities to store the merchandise. The incentive company bought merchandise from manufactures or distributors, and stocked its warehouses with the merchandise. The incentive company had catalogs prepared which showed the merchandise stocked by the incentive company. If a participant qualified for an award of merchandise, the participant was limited to merchandise shown in the catalog. The items of merchandise that could be ordered through the catalog depended on the amount of points achieved by the participant. Hence, a participant who earned more points under the incentive program could order more expensive merchandise, or more items of merchandise, than one who had a lesser accumulation of incentive points.
This warehousing had the disadvantage of tying up the incentive company's money in the inventory stockpile. This money was not drawing interest and was not being used while the inventory sat in the warehouse. Incentive companies could easily overestimate the amount of total achievement of the participants under the various incentive programs it was providing. In this case, the amount of merchandise ordered was less than expected, resulting in an overstocking of merchandise. This exacerbated the inventory drain, since the merchandise sat in the warehouse for even a longer time. In fact, because of such long duration of being stockpiled, some of the merchandise had to be sold on the general market in order to become rid of it.
If on the other hand the incentive company underestimated the total performance of participants in its incentive programs, then it was often understocked in the items of merchandise requested. This resulted in delayed shipment and delivery of the requested merchandise, causing the participant aggravation and dissatisfaction with the merchant and the incentive company. Moreover, since these later purchases often were not in bulk, or because prices increased, the cost to the incentive company usually escalated above initial costs.
There was another problem with such warehousing. In order to continually have merchandise readily available, the incentive companies often had to stock many of the same items year after year. The participants became bored with having the same old merchandise choices, or a selection with little variety. Accordingly, participants had little motivation to achieve an award in which they had little interest. Additionally, after the participants acquired a certain number of the merchandise items through prior programs, they had no use for more of the same when the merchandise was again offered later. With such a warehousing system, the incentive company was motivated to buy merchandise in bulk in order to get better cost breaks. Furthermore, in order to better move any one item of merchandise inventory better and to keep track of inventory more easily, the incentive companies were encouraged to limit the number of items available. This also lead to stocking the same old merchandise over long periods, which resulted in participants having the same boring choices over the years. This resulted in participants becoming jaded after a certain degree of exposure to the incentive programs.
Other disadvantages were that the incentive company had to properly maintain warehouse conditions, such as temperature and humidity, to preserve the merchandise, as well as take precautions to prevent fire or theft. Accommodations to receive the goods, stack or arrange them, as well as record their location, their entry and departure were also needed. Some incentive companies also found it desirable to maintain a number of warehouses throughout the country for better distribution.
Moreover, the warehousing system had problems associated with shipping merchandise by the incentive company to the participant. This included merchandise being damaged in transit, not only causing frustration to the participant, but necessitating the incentive company spending time and effort to package and ship merchandise once again to the participant. The system entailed the administrative procedures and additional cost of insuring merchandise not only during warehousing, but during its shipment.
With the other kind of merchandise system, the incentive company did not have its own warehouses. Rather it had contracts with suppliers or distributors of products to meet the obligations to participants. With this type of system, there were the aforesaid problems of goods damaged during shipment which lead to participant aggravation.
Moreover, because the supplier or distributor was spaced from the participant by an additional layer of communication, there often were delays in shipment and mistakes caused by miscommunications. Shipment delays resulted if the supplier or the distributor was understocked with the requested merchandise. With the supplier or distributor shipping the goods, there was a greater likelihood of there being a mistake in the exact goods that were to be shipped. It was furthermore necessary for the incentive company to maintain the additional relationship with the suppliers in order to properly effect a satisfactory program. Maintaining relationships, in this respect, was a disadvantage as compared to the warehousing system. With either the warehousing or the supplier merchandise system, the participants frequently paid higher prices than the price for the same merchandise offered by a public retailer and especially by a discount store. This had the unsavory result of the participant believing the dollar values assigned for the purchase points were inflated and illusory.
In some instances, the earned credits were spent by applying them toward paid trips, which also had drawbacks. One problem is that there was usually only one vacation spot to select from if the goal was met. In some cases, participants in one geographical area, such as in the eastern half of the US were awarded a trip to a spot in Florida, for example, while those in the western half of the US were awarded a vacation to a different place such as Hawaii. However, each participant was limited to choosing only one vacation spot. If the participants had been to the same area previously, in many instances they had little or no interest in returning once again. They additionally may have had no interest in the vacation spot for whatever reason, which might have included family limitations, pure lack of interest, or medical problems. There were also the inconveniences of travel arrangements and the psychological stress associated with traveling from a familiar environment to an unfamiliar one. These shortcomings all militated against motivating the participant to achieve.
Furthermore, when a participant redeemed an award, the merchant was responsible for reimbursing the incentive company for the cost of the award. This had the disadvantage of decreasing the merchant's cash flow and limited the amount of awards that the merchant could afford to issue.
Incentive plans have gone so far as to convert the points into dollars and then issue cash payments to the participants. Once the cash was paid, however, there was little to remind the participant of the merchant that issued it. There was also the problem of a participant having to carry cash on their person, often making the person more vulnerable to robbery and subsequently very uncomfortable. In the event of a robbery the stolen money was nearly impossible to trace and practically unrecoverable. Also if the cash was lost or misplaced, practically anybody who found it could claim it and the participant would have little recourse. Furthermore, since cash is widely accepted throughout the world, there was the added problem of the award often being spent outside the award issuing merchant's normal line of goods or services. Not only did this decrease a merchant's cash flow, but it did nothing to increase the sales of the merchant's products which subsequently, had to be further stored. This also resulted in allowing the merchant's competition to gain the award recipient's business, as the recipient might have spent the cash award wherever so desired.
Then there came another incentive program seen by Burton and Henke's joint U.S. Pat. No. 5,025,372, issued Jun. 18, 1991. This allowed an incentive company to use a system where consumers wishing to participate in the program could apply for a charge card from a program sponsoring lending institution. The charge cards when issued, would identify participants and would accumulate cash values to their cards based on the participants' performance under the incentive program. The awards could then be spent at any location that accepted the particular charge card. Statements bearing the names of the lending institution and the merchant who sponsored the incentive program would be sent to participants. These statements would show the participants the cash awards they have earned, how much they have used, and how much is available for use.
Burton and Henke's program has the disadvantage of limiting consumer participation to only those that are approved by the lending institution to receive a charge card. If the applicants are not approved, they must participate in the same manner and endure the same problems, as provided by incentive programs prior to Burton and Henke's joint patent. Approval of a charge card is a difficult feat for most individuals to accomplish. Many times an individual's credit report is the victim of human error. These reports are reviewed by lending institutions and any negative marks that appear are often the basis for the institution's rejection of an applicant's request for credit. The negative marks, if mistakenly applied, are usually unknown by the applicant. Often, the applicant is only made aware of the errors when he/she receives the lending institution's reason for denial. The applicant must then try to remove the marks and reapply. However, removing the marks is usually very difficult. Often times, negative marks can only be removed by way of a retraction letter from the business that reported the marks. Since the marks were mistakenly applied, the applicant must prove his/her innocence, which is extremely difficult as this goes against the US judicial system that states that an individual is presumed innocent until proven guilty. Often times the applicant can not remove the marks or gives up trying and is left with having increased difficulty in receiving a credit line from any lending institution in the future. Not only can negative marks appear by mistake, but many individuals at some point in their lifetime are met with some sort of financial crisis, such as the loss of a job. This often causes them to fall behind on their credit obligations. This causes negative marks to appear on the credit report and are next to impossible to have removed, thus scaring the applicant's credit report for life. Furthermore a lending institution often requires a credit applicant to have a certain amount of annual income, previous payment history, and other stringent requirements before being approved. Many individuals can not meet these requirements and are subsequently denied a credit line. This causes frustration for those that wish to participate in the program as designed but cannot because they do not have the lending institution's approval. Those individuals that are fortunate enough to be approved by the lending institution, as mentioned before, earn cash awards to their charge cards based on their performance. Since charge cards are accepted virtually worldwide, there is little to secure that the award issued to the recipient will be spent on the award issuing merchant's normal line of goods or services. Worse yet, it could be spent on goods or services provided by the merchant's competition. If the merchant's competition doesn't accept the charge card, the participant often can make an extra trip albeit risking accessing cash from a cash dispensing machine or other similar device. Returning with the cash, the participant can then spend the award with the merchant' s competition. With the award being spent elsewhere, this again causes the merchants goods to remain unsold, requiring further storage. And, as stated before, once the award is issued, the merchant must reimburse the incentive company for the amount of the award. The merchant must also pay the incentive company and/or the lending institution a processing fee. This has the previously stated disadvantage of decreasing the merchant's cash flow and limiting the amount of awards the merchant could afford to issue. Furthermore, once the award was issued, there was often little in the award itself that reminded the recipient of the merchant who issued the award.
In addition, with Burton and Henke's joint patent, upon enrollment of a merchant's incentive program, participants could set aside a certain percentage of earned credits that are to be withheld. However, in order to change this percentage figure, a participant was required to call or write the incentive company that provided the program. This caused the participant frustration as time, effort and money had to be spent whenever a change in their withholding percentage was desired. This also necessitated the incentive company having to acquire and assign personnel to accept the call or letter from the participant, update the participant's account and send notice to the participant of the completed change.
Burton and Henke's joint patent also intended to appeal to lending institutions as these institutions are often looking to issue more credit cards to consumers. The idea was that participants of the program would be more likely to use the sponsoring institution's charge card than some other charge card they hold. This would hold true as participants would be using the sponsoring institutions' cards to redeem whatever performance credit had been stored there. Often times the performance credit available on a participant's charge card would be less than the total bill of a purchase, allowing the balance to be conveniently paid using the bank's credit line. However, the appeal to lending institutions was dismal in that, participants had to be approved by the banks in order to participate in the program. Without the lending institution's sponsorship, there was no new incentive program. The program relied on a lending institution's sponsorship. Lending institutions were also faced with the disadvantage of not being able to sponsor more than one merchant incentive program per card issued to consumers. In other words, if a consumer wished to participate in two different merchant's incentive programs, the consumer would need two charge cards; one for each merchant. Similarly, each additional merchant incentive program that a consumer wished to participate in required the consumer to apply for, and subsequently carry, an additional charge card. This would cause a lending institution to issue another card, credit line and monthly statement to a consumer for each merchant incentive program the consumer joins. Since the size of a consumer's wallet is usually limited, the amount of cards that a consumer can carry is limited. This means that a consumer, after joining several merchant incentive programs and having no more room in their wallet for additional cards, would be inclined to pass up other merchant incentive program offers. Realizing this limitation and since lending institutions usually extend only a limited amount of credit to any one individual, lending institutions would be inclined to sponsor only a limited amount of merchant incentive programs. This means that the amount of merchants that could install such an incentive program would also be limited. Many merchants cannot afford to be their own lending institutions. However, banks can, and subsequently this incentive program has been repeatedly used by banks to promote the use of their charge cards over other bank's charge cards. Since banks could use the incentive program on their own, they had little reason to assist other merchants in their incentive program needs. This left nearly all non-lending institution type merchant's without an improved incentive program to aid the sale of their goods or services.
Another incentive plan available is shown by McCarthy's U.S. Pat. No. 5,202,826, issued Apr. 13, 1993. With this system, participants of the incentive program accumulate cash rebates in a holding account at a central center. The rebates are often based upon multiplying a merchant's predesignated or keyed in discount rate by a participant's purchase amount. Consumers can participate in multiple merchant incentive programs with the need for only one identification code number. All of a consumers cash awards earned from multiple merchants' programs accumulate in one account for the consumer. The accumulated amount is then issued to the consumer at certain time periods, such as the consumer's birthday. This program has the disadvantage of a participant having to make an extra trip to a cash dispensing machine or other similar device or having to have a checking account in which money could be transferred to, in order to receive their awards. This also has the disadvantage of a participant having to wait until the end of certain periods within the program before being able to access their awards. Furthermore, this program has problems similar to Burton and Henke's joint patent. Again, when the award is paid, there is little to remind the participant of the merchant that issued the award. The merchant must reimburse the incentive company for issuing the award, which reduces the merchant's cash flow. It is usually reduced even further by the added payment of a processing fee to a cash dispensing company or other similar financial broker. The reduced cash flow limits the amount of awards the merchant could afford to issue. With the participant receiving cash as an award, the participant again faced the aforementioned problems of often becoming more vulnerable to robbery, subsequently feeling very uncomfortable, and having difficulty recovering stolen or lost cash. By issuing cash, the merchant also faced the previously stated problems of a recipient being able to spend the award with the merchant's competition, causing the merchant's own goods to remain unsold, requiring further storage. If a participant is issued a check instead of accessing the award from a cash dispensing machine, or other similar device, there are several disadvantages. The incentive company has to spend additional time and money to write and mail the check to the participant. This also causes delays before a participant can receive their award, as the participant must wait for the company to write the check, mail it, and then wait for the post office to deliver it. Postal delivery normally takes two to three working days, but possibly even longer. Sometimes delivery never occurs at all, as mail is often lost in transit and at that point, an inquiry would have to be made by the participant in order for a replacement check to be sent. This would create even further delays before the participant could receive their award. If and when the check finally arrives it must be brought to a bank or other similar check clearing institution, for redemption by the participant, which takes even more time. If the participant does not have a bank account, the check would have to be cashed at the bank it is drawn upon. Often times these banks are quite a distance, often out of state, from the participant's home. This requires the participant to travel a great distance to receive the award, which, after time and money are spent on traveling, might not be worth the trip. If the participant does have a bank account, but the balance in the account is not greater than the amount of the check, the check must be deposited. This often requires the use of a deposit slip. This creates paper waste. The check can then be withdrawn upon only after it clears. Check clearing often takes several days and in some cases, especially with new accounts, up to a month. This causes further delays before a recipient can receive their award. Depositing the check often requires the participant to take the time to fill out a deposit slip. It also subjects the participant to the possibility of the check not clearing and the participant being charged a penalty fee. If and when the check clears, in order to finally receive the award, the participant is usually required to make another trip to the bank. There, he/she must often fill out a withdrawal slip, which takes more time and wastes more paper. However, instead of using a withdrawal slip, a check could be written against the account. This might save the participant a trip to the bank, but causes more paper waste and usually costs the participant a check clearing fee. If the participant's bank account balance is greater than the amount of the check, then the participant can receive the award without further delays. However, the check itself creates additional paper waste. Additionally, participants are not able to access accumulated awards when making purchases. And, since consumers do not want to wait long periods and make extra trips to receive their awards, there is little motivation for the card to be presented when participants make purchases. The incentive program's appeal toward lending institutions, in this respect, was much less than that presented by Burton and Henke's joint patent.
Another incentive program on the market allows a participant to earn commissions on whatever he/she buys using a sponsoring lending institution's charge card. The commissions accumulate on the charge card and are good toward the purchase of an also sponsoring, merchant's goods or services. Charge cards are usually printed, advertising the names of the program sponsoring merchant and lending institution and then issued to participants. This program has the aforementioned problems of a participant having to qualify for a credit line from the sponsoring lending institution for every merchant the participant wishes to participate with. This also includes participant's having to wait until the end of certain time periods within the program before having access to their awards. It further includes participants running out of room in their wallet for extra cards and confusion created from having several charge cards and being limited to a budget, as will be described, and, as a result of such lack-of-wallet-room and undesired confusion, passing up other merchant incentive program opportunities. The program is also faced with having dismal appeal to lending institutions in that consumer appeal is decreased by reasons stated in the previous three sentences and there is still the problem of the lending institution having to issue multiple cards, credit lines, and statements to a single consumer who wishes to participate in multiple merchant incentive programs. Further problems include lending institutions limiting the amount of merchant incentive programs they will sponsor because the lending institution limits the amount of credit they will extend to a single individual. The incentive program furthermore has the disadvantage of having to rely on a lending institution's sponsorship which has the aforementioned problems of limiting program availability to only lending institution sponsored merchants.
Confusion would often occur to a consumer who participates in several merchant incentive programs. A consumer usually maintains a budget. So long as they stay within the budget's limit, they can comfortably spend money. Since consumers often wish to stay within their budget, they may have difficulty deciding which incentive charge card to use when making purchases. For example; Say a consumer has three separate incentive cards. When making a purchase that will be the last purchase that can be made which allows a participant to stay within their budget, what card should the participant use? Should a participant use card number one, which accumulates credit toward the purchase of gas? Should the participant use card number two, which accumulates credit toward the purchase of a car? Or, should the participant use card number three which accumulates credit toward the purchase of pizza? Moreover, should the participant wish to evenly split their budget among the three cards, problems will arise. Since various purchases often carry different totals, the participant will most likely lose track of which card has been used enough and which one has not. There are sure to be other similar problems relating to a participant having too many incentive cards. In time, as this trend continues, these problems should become evident. In addition, this incentive program emphasizes frequent use of the sponsoring lending institution's charge card toward every purchase with any merchant, more so than it emphasizes making purchases at the sponsoring merchant. Participants receive no greater award accumulation for making purchases with the sponsoring merchant than they do by making purchases with other merchants. Thus, this program has the unsavory result of allowing a participant to be rewarded for making purchases with the sponsoring merchant's competition. Furthermore, unless a participant used their incentive charge card for making purchases, the participant would have no added incentive for making purchases with the sponsoring merchant, since no awards would accumulate.
Another incentive program has been used by certain telecommunications service companies. This program allowed participants to earn discounts on phone calls they made to people they assisted in switching to the telecommunication companies' service. This program has mainly been limited in use by telecommunication service companies, since these companies can monitor to whom every customer's phone call is made in order to apply the appropriate discount, whereas most non-telecommunication companies do not offer a similar traceable type of service and obviously can not offer their customers such discounts. This program also does not lend its assistance to other merchants that wish to use the incentive program in conjunction with the telecommunication companies use of the program, which, in this respect, is a disadvantage when compared to traditional multi-level marketing companies. Likewise, a consumer can not participate in multiple telecommunication incentive programs while using one account number as identification for the lot. A unique account number is required for each company the consumer participates with. Subsequently, this program has dismal appeal to a lending institution's sponsorship as consumers again need to be issued multiple cards, credit lines and statements and availability of the program is mainly limited to telecommunication type merchants.
An additional feature brought about by the use of charge cards has been the ability to issue cash returns to a consumer account. However, when a merchant is to give store-credit-only for a consumer's return, the consumer must have a charge card that was issued for exclusive use with the merchant. If the consumer does not have this type of card, the merchant must often issue a paper credit voucher to the consumer. This takes time and also wastes paper. Further, the consumer must later present their credit voucher when making a future purchase in order to redeem their credit. Consumer's often lose these credit vouchers or realize they have forgotten to bring them some time during shopping or checkout. This causes the consumer's money to remain with the merchant for an even longer time, while not earning any interest. This often creates aggravation for the consumer. Many merchant's do not have the aid of a lending institution that issues charge cards to consumers for exclusive use with the merchant. This results in many merchants having to use the credit voucher method to issue store credit returns. Those merchants that are fortunate to have the backing of a lending institution still have problems. Their consumers must still gain approval of a credit line from the lending institution before they can receive a card. Considering the problems mentioned before of consumers having negative marks on their credit reports, having difficulty clearing them, and not meeting the lending institutions stringent demands, many consumers are not approved for a card. This means that merchants again, must resort to using the credit voucher method when making store credit returns to these individuals.